Even as the Indian rupee fell to multiple record lows amid the escalation of the West Asia conflict, New Delhi used its domestic currency to settle nearly $15 billion (around Rs 1.38 lakh crore) worth of imports during March-May, according to a report by The Indian Express. The figure reveals an increase in the use of the rupee for international trade and coincides with a surge in India’s purchases of Russian crude oil.
Data released by the Reserve Bank of India (RBI) showed that imports worth Rs 1.38 lakh crore were settled in rupees during the three-month period. Based on an average exchange rate of around Rs 94 per US dollar during March-May, the amount is equivalent to approximately $14.6 billion.
Rupee-settled imports accounted for around 7.1% of India’s total merchandise imports during the period, compared with just Rs 42,506 crore, or around 2.4% of imports, between December 2025 and February 2026.
The latest three-month figure also surpassed the total value of imports settled in rupees during the full financial years 2023-24 and 2024-25. India used the rupee to settle imports worth Rs 99,680 crore in 2023-24, Rs 1.13 lakh crore in 2024-25 and Rs 1.72 lakh crore in 2025-26.
Russia emerges as key factor
It is reportedly said that the rise was linked primarily to the increase in India’s purchases of Russian oil. “The rupee’s depreciation will only explain a small part of this increased rupee settlement of imports,” Madan Sabnavis, Chief Economist at Bank of Baroda, told The Indian Express, pointing instead to the sharp rise in Russian oil purchases from March.
India imported Russian crude petroleum worth $17.13 billion between March and May, a 30% increase year-on-year, according to Commerce Ministry data. In February alone, imports of Russian oil stood at around $2.49 billion.
Why India increased Russian oil purchases
India’s purchases of Russian crude rose sharply after the US issued a waiver allowing the purchase of sanctioned Russian oil.
The first waiver was announced on March 12 and was followed by further extensions in April and May. The final waiver ended on June 17, with no further renewal announced since then.
The increase in Russian oil purchases came at a time when global energy markets were facing heightened uncertainty following the escalation of the conflict in West Asia and disruptions linked to the Strait of Hormuz.
Around 40% of India’s oil requirements are estimated to be linked to supplies passing through the strategic waterway.
How rupee settlement works
India has increasingly explored mechanisms that allow international trade to be settled in local currencies. The RBI introduced a framework for settling international trade in rupees in 2022. Under such arrangements, Indian importers can make payments in rupees to designated accounts maintained by foreign banks with Indian banks.
The arrangement can reduce dependence on the US dollar for bilateral trade and help lower pressure on India’s foreign exchange reserves. For India, which consistently runs a trade deficit, such mechanisms can be particularly significant.
The Indian Express report also stated that in 2025-26, the country’s trade deficit stood at around $119 billion. A weaker rupee increases the amount Indian importers must pay in domestic currency for goods priced in dollars.
Russian oil may have created a rupee trade loop
Russia receives rupees when Indian companies pay for Russian oil. Those rupees can then potentially be used to purchase Indian goods and services.
“With India paying for Russian oil in rupees, it makes sense for Russia to use those rupees to pay for what products it can from India,” an economist told The Indian Express on condition of anonymity.
India’s exports settled in rupees surged to Rs 41,373 crore in March, compared with Rs 15,195 crore in February. However, the figure declined to Rs 10,218 crore in April and Rs 8,289 crore in May.
The sharp March increase may also have been linked to trade with Russia, according to economists.
Rupee payments for exports remain limited
Despite the recent rise, rupee-denominated payments account for only a small share of India’s total export receipts.
According to The Indian Express report, India received payments in rupees for exports worth Rs 1.75 lakh crore in 2023-24, or 3.56% of total exports, Rs 1.69 lakh crore in 2024-25, or 3.21% and Rs 1.87 lakh crore in 2025-26, or 3.22%.
In the first two months of 2026-27, rupee payments for exports stood at Rs 18,507 crore, accounting for around 1.82% of total exports.
